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Saturday, October 17, 2015

Can I repatriate funds from NRE or NRO Bank account? Yes

Yes, you can repatriate funds from NRE, NRO or FCNR account to abroad, but each has their own rules and limitations. NRE and FCNR accounts are most flexible in terms of repatriation, also known as freely repatriable, which means that no prior RBI approval is required to remit funds overseas from these account. This includes both NRE and FCNR fixed deposit as well as NRE saving the account. You can also repatriate both principle and interest earned to overseas from these two accounts.On another hand, NRO accounts (savings, current and fixed deposit) is more restricted, they are not freely repatriable, which means you need to take prior approval from RBI to remit fund overseas. The interest earned on your NRO Savings Account is repatriable after payment of taxes applicable in India and you can also transfer funds up to USD 1 Million in a year after taking RBI's permission, provided your funds are acquired out of rupee resources in India or by way of legacy or inheritance from a person who was resident in India.

What is Repatriation? What is freely Repatriable?

Repatriation of funds means remitting funds or sending money outside India. You may need to send money overseas for education purpose or for expenditures if your children are living and studying abroad. Usually prior approval from RBI is required to remit money overseas, but there is something called freely repatriable, which means that no prior RBI approval required for remitting funds overseas.

NRE and FCNR accounts, both savings and fixed deposit are freely repatriable and thus very convenient to remit money and that's why one of the most popular accounts among NRI. You may also repatriate up to a maximum of USD 1 million (equivalent) per calendar year from your NRO account if the assets acquired are out of rupee resources in India or by way of legacy or inheritance from a person who was resident in India.

This is one of the important reason why you should open an NRE saving account, to learn more about differences between NRE and NRO saving accounts, see here:

So, Yes you can send funds from NRE, NRO or FCNR account to overseas. Since NRE and FCNR are freely repatriable accounts, you can remit fund abroad without prior approval from RBI, you can also remit both interest and principle amount. On the other hand, NRO account is a little bit restricted. You can transfer USD 1M in a year, but you need to take prior approval from RBI. You can also transfer interest earned on NRO account but only after paying tax in India.